Economic Recovery Tax Act of 1981

Fall Economic Recovery Tax Act of 1981 Merlin G. Briner 0 0 This Article is brought to you for free and open access by Akron Law Journals at Please take a moment to share how this work helps you through this survey. Your feedback will be important as we plan further development of our repository. Follow this and additional works at: https://ideaexchange.uakron.edu/akronlawreview Part of the Law and Economics Commons Recommended Citation Available at: https://ideaexchange.uakron.edu/akronlawreview/vol15/iss2/3 - INTRODUCTION T-HE 1981 ACT represents a dramatic approach to the revision of the federal tax law. For the first time in recent history Congress has drastically reduced income, gift and estate taxes. The goals of the Act as set forth in the report of the United States Senate Finance Committee are: to insure economic growth in the future; to upgrade the country's industrial base; to stimulate productivity and innovation; to lower personal income taxes; to control the growth of the federal government; to restore certainty to economic decision making; and to provide a sound basis for economic recovery. The objective of the $750 billion tax cut to be phased in by 1987 is to restore and create incentives for both individuals and businesses to "work, produce, save and invest." In essence this Act and the results it either produces or fails to produce will be a test of our free enterprise system. The Act, coupled with the administration's policy of deregulation and relaxing government controls of business, provides the opportunity business leaders have been looking for. A key to future economic health is the reduction of federal expenditures. If these cannot be curtailed, the combined effect of expenditures and reduced tax revenues on inflation will be disasterous. If expenditures cannot be controlled, then taxes will have to be increased substantially in the not too distant future. As this article goes to press, measures the administration is proposing include: requiring corporations and contractors to pay taxes earlier; eliminating tax credits for insulation and solar heating; restricting the issuance of tax exempt industrial development bonds; and increasing the income tax on unemployment pay. Democrats and some Republicans are also urging that excise taxes on gasoline, telephone calls, cigarettes and liquor be increased; that cost of living increases for retirees be deferred and that oil tax breaks be restricted. Compiling this article required a concentrated effort to meet the publication deadlines for the fall issue of the Law Review. This article, in addition to the annual Tax Developments article, proved the dedication of the contributing authors and the Law Review staff. Appreciation is hereby expressed to the following students who made substantial contributions in the researching and writing of this article: *Professor of Law, University of Akron School of Law; formerly Manager, Tax Department, The Timken Co., Canton, Ohio; B.A.A., Wichita State University; J.D., University of Akron School of Law. Published by IdeaExchange@UAkron, 1982 [325] Ann Amer Brennan David C. McAlister Special appreciation is extended to William for their dedicated efforts in editing. William R. Meyer, Jr. Thomas J. Thomas Meyer and Amie Bruggeman Individual Income Tax Changes 1.01 Individual Income Tax Rate Changes 1.02 Maximum Capital Gains Rate - Personal Holding Company Rate 1.03 Alternate Minimum Tax 1.04 Marriage Tax Lessened 1.05 Exclusion for Dependent Care 1.06 Savings Interest Exclusion 1.07 Child and Dependent Care Credit 1.08 Indexing 1.09 Residential Exclusion Amount for Over 55's Increased 1.10 Sale of Residence Roll-Over Period Increased 1.11 Dividend Interest Exclusion Corporate Business Tax Changes 2.01 Corporate Charitable Deduction Raised 2.02 Gifts and Awards to Employees 2.03 Corporate Tax Rates Lowered 2.04 Tax Credit and Extension of Loss Carryovers 2.05 Subchapter S Corporations 2.06 Accumulated Earnings Tax Credit Increased Business Incentive Provisions 3.01 Election to Expense Certain Assets 3.02 Anti-Churning Rules 3.03 Minimum Tax on Accelerated Cost Recovery System 3.04 Accelerated Cost Recovery System for Personal Property 3.05 Accelerated Cost Recovery System for Real Property 3.06 Carryover of Recovery Attributes 3.07 Calculating Earnings and Profits Under Accumulated Cost Recovery System 3.08 Research and Development Credit 3.09 Safe Harbor Leases 3.10 Incentive Stock Options 3.11 Investment Credit - New Percentage Applicable 4.00 Retirement Savings Provisions 4.01 Individual Retirement Accounts - Deductions, Contributions and Eligibility 4.02 Qualified Voluntary https://ideaexchange.uakron.edu/akronlawreviewE/vmol1p5l/oisys2e/e3 Contributions Briner: Economic Recovery Tax Act of 1981 ECONOMIC RECoVERY TAX AcT OF 1981 Keogh, Simplified Employee Plan (S.E.P.) and Subchapter S Plan Qualified Retirement Plan - Constructive Receipt Employee Stock Ownership Plan - Payroll (...truncated)